Mexico, Russia and Thailand added gold
now valued at about $6 billion to their reserves in February and
March as prices advanced to a record, the dollar weakened and
Treasuries lost investors money.

Mexico bought 93.3 metric tons since January, adding to
holdings of about 6.9 tons, according to International Monetary
Fund data. Russia increased its reserves by 18.8 tons to 811.1
tons in March and Thailand expanded assets by 9.3 tons to 108.9
tons in the same month, the data show.

Central banks are expanding their gold reserves for the
first time in a generation as purchases by billionaire investors
including John Paulson contributed to bullion extending its
longest winning streak since at least 1920. Countries were also
boosting their holdings in 1980 when gold rose to a then-record
$850 an ounce, only to fall for most of the next 20 years.

“Central banks have good reason to buy gold,” said Peter Morici, a professor of business at the University of Maryland in
College Park and a former economic adviser to the U.S.
government. “The dollar is no longer a safe asset for backing
currencies. Treasuries are not a sound investment” and budget
and debt issues mean central banks should buy gold, he said.

Gold for immediate delivery climbed to a record $1,577.57
an ounce on May 2 and traded at $1,539.29 by 3:04 p.m. in London
today. Prices are up 8.3 percent this year and have gained the
past 10 years. Global holdings of gold by governments and
official institutions such as the IMF stood at 30,523 tons by
April, according to the World Gold Council.

Lowest Level

The dollar today slid to the lowest level since July 2008
against six major currencies. Treasuries lost investors 0.14
percent in February and March, according to Bank of America
Merrill Lynch indexes.

Bullion earlier today dropped after the Wall Street Journal
reported Soros Fund Management LLC sold precious metal holdings
because of a reduced risk of deflation, citing unidentified
people close to the matter. The Soros fund held shares in the
SPDR Gold Trust and the iShares Gold Trust equal to about
508,800 ounces as of Dec. 31, a U.S. Securities and Exchange
Commission filing on Feb. 14 showed.

Soros described gold at the World Economic Forum’s meeting
in Davos, Switzerland, in January last year as “the ultimate
asset bubble.” In a Nov. 15 speech in Toronto the 80-year-old
said conditions for the metal to keep rising were “pretty
ideal” and at this year’s Davos forum he said the boom in
commodities may last “a couple of years” longer. Michael Vachon, a spokesman for Soros, declined to comment today.

Thailand’s Reserves

Since the end of 2009 countries including India, Sri Lanka,
Mauritius and Bangladesh have bought gold. Before this year’s
purchases, gold accounted for about 0.2 percent of Mexico’s
total reserves, and 2.6 percent of Thailand’s reserves. The
metal accounts for more than 70 percent of reserves of the U.S.
and Germany, the biggest holders, World Gold Council data show.

“Mexico’s gold accumulation confirms the demand of
emerging market central banks to diversify their reserves,”
said Bayram Dincer, an analyst at LGT Capital Management in
Pfaeffikon, Switzerland. “They will be the big buyers for years
to come.”

A call and text message seeking comment from Thailand
Central Bank spokeswoman Sirithida Panomwan Na Ayudhya was not
returned after business hours.